ZUNECA PHARMACEUTICAL, AKRAM ARAIN AND/OR VENUS ARAIN, M.D.

, AND
STYLE OF ZUNECA PHARMACEUTICAL vs. NATRAPHARM, INC.
G.R. No. 211850
(November 06, 2020)

Facts:
Petitioner Zuneca Pharmaceutical has been engaged in the importation, marketing, and sale of
various kinds of medicines and drugs in the Philippines since 1999. Among the products it has
been selling is a drug called carbamazepine under the brand name "ZYNAPS", which is an anti-
convulsant used to control all types of seizure disorders of varied causes like epilepsy.
Natrapharm, on the other hand, is a domestic corporation engaged in the business of
manufacturing, marketing, and distribution of pharmaceutical products for human relief. One
of the products being manufactured and sold by Natrapharm is citicoline under the trademark
"ZYNAPSE", which is indicated for the treatment of cerebrovascular disease or stroke. The
trademark "ZYNAPSE" was registered with the Intellectual Property Office of the Philippines
(IPO) on September 24, 2007 and is covered by Certificate of Trademark Registration No. 4-
2007-005596. Natrapham filed with the RTC a Complaint against Zuneca for Injunction,
Trademark Infringement, Damages and Destruction with Prayer for TRO and/or Preliminary
Injunction, alleging that Zuneca' s "ZYNAPS" is confusingly similar to its registered trademark
"ZYNAPSE" and the resulting likelihood of confusion is dangerous because the marks cover
medical drugs intended for different types of illnesses.

Zuneca claimed that it has been selling carbamazepine under the mark "ZYNAPS" since 2004
after securing a Certificate of Product Registration on April 15, 2003 from the Bureau of Food
and Drugs

The RTC ruled that the first filer in good faith defeats a first user in good faith who did not file
any application for registration. Hence, Natrapharm, as the first registrant, had trademark
rights over "ZYNAPSE" and it may prevent others, including Zuneca, from registering an
identical or confusingly similar mark.

CA affirmed RTC’s ruling. Hence, Zuneca filed the instant Petition.

Issue:
Whether or not NATRAPHARM has the right to prevent ZUNECA from using/registering the
trademark "ZYNAPS".

Ruling:

Under the IP Code, ownership of a mark is acquired through registration. While it is the fact of
registration which confers ownership of the mark and enables the owner thereof to exercise the
rights expressed in IP Code, the first-to-file rule nevertheless prioritizes the first filer of the
trademark application and operates to prevent any subsequent applicants from registering
marks under the IP Code.

There is a legislative intent to abandon the rule that ownership of a mark is acquired through
use.

Natrapharm is the first-to-file registrant of "ZYNAPSE". Zuneca, on the other hand, is a prior
user in good faith of a confusingly similar mark, "ZYNAPS". Considering that a petition for
review on certiorari under Rule 45 should only raise questions of law, it is improper to put into
issue at this juncture the existence of bad faith in Natrapharm's registration.
The Supreme Court affirmed the factual findings of the lower courts. Zuneca failed to show that
the registration was made fraudulently or in bad faith. Since Natrapharm was not shown to
have been in bad faith, it is thus considered to have acquired all the rights of a trademark owner
under the IP Code upon the registration of the "ZYNAPSE" mark.

In any event, while Natrapharm is the owner of the "ZYNAPSE" mark, this does not, however,
automatically mean that its complaint against Zuneca for injunction, trademark infringement,
damages, and destruction with prayer for TRO and/or preliminary injunction should be
granted. The application of Section 159.1 of the IP Code in the case at bar results in Zuneca's
exemption from liability for trademark infringement.

Section 159.1 of the IP Code clearly contemplates that a prior user in good faith may continue to
use its mark even after the registration of the mark by the first-to-file registrant in good faith,
subject to the condition that any transfer or assigmnent of the mark by the prior user in good
faith should be made together with the enterprise or business or with that part of his enterprise
or business in which the mark is used. While there is no issue as to the likelihood of confusion
between "ZYNAPSE" and "ZYNAPS', the Court believes that the evil of medical switching will
likely not arise, considering that the law requires the generic names of drugs to be written in
prescriptions.

To further reduce therefore, if not totally eliminate, the likelihood of switching in this case, the
Court hereby orders the parties to prominently state on the packaging of their respective
products, in plain language understandable by people with no medical background or training,
the medical conditions that their respective drugs are supposed to treat or alleviate and a
warning indicating what "ZYNAPS" is not supposed to treat and what "ZYNAPSE" is not
supposed to treat, given the likelihood of confusion between the two.

The Court declared –

1. Petitioners Zuneca et al as the prior users in good faith of the "ZYNAPS" mark and
accordingly protected under Section 159.1 of the IP Code.
2. Natrapharm as the lawful registrant of the "ZYNAPSE" mark under the IP Code.
3. Zuneca and Natrapharm are ordered indicate on their respective packaging, in plain
language understandable by people with no medical background or training, the
medical conditions that their respective drugs are supposed to treat or alleviate and a
warning indicating what "ZYNAPS" is not supposed to treat and what "ZYNAPSE" is
not supposed to treat.